Foreign Tax Credit Carryover Limit

[bballbap]

I continue to live in a foreign country and have unused foreign tax credits on foreign wages going back 20 years from 2021. How do I amend prior tax returns to maximize usage of these past unused foreign tax credits? How does the 10 year limit to file a claim for a refund apply? Is it possible to modify a 2012 return for a refund that has carried forward foreign tax credits reaching back to 2002? 

[xmasbaby0]

You can only amend to seek a refund three years back from the filing deadline for the tax year.  Not sure where you saw a ten year limit.    You cannot amend back for ten or  twenty years to seek refunds for all of those years.

At this point you could only amend as far back as 2019 to seek a refund.  Any older refunds have been forfeited.

[Mike9241]

if you have carryforwards they exist only because the FTC for that year and the amount of FTC carryfoward exceeded the allowable amount for that year. nothing you can do can change this unless you were to report more foreign income of the general category. It is quite common for FTC to be used FTC every year and eventually the carryforward expires 

there is a 10 year carryforward limitation for FTC so any prior to  2012 would have expired unused. also any unused FTC can only be carried back 1 year

Internal revenue code section 6511 does allow for 10 years to amend returns 

(d)(3)Special rules relating to foreign tax credit
(A)Special period of limitation with respect to foreign taxes paid or accrued
If the claim for credit or refund relates to an overpayment attributable to any taxes paid or accrued to any foreign country or to any possession of the United States for which credit is allowed against the tax imposed by subtitle A in accordance with the provisions of section 901 or the provisions of any treaty to which the United States is a party, in lieu of the 3-year period of limitation prescribed in subsection (a), the period shall be 10 years from the date prescribed by law for filing the return for the year in which such taxes were actually paid or accrued.

what all this means is you could claim credit for unused FTC from 2012 of the general category by carrying it back to 2011

[bballbap]

In this particular case the FTC limit for each year has never been exceeded because the foreign taxes paid have never been entered on form 1116 under the general category on any return. No allowable portion of the FTCs were ever used. The FTC is related to taxes paid on wages above the Foreign Earned Income Exclusion (FEIE) and fairly easy to calculate by multiplying the foreign tax paid by the ratio of the FEIE / Total Foreign Wages to find the disallowed portion of the foreign tax and then subtracting this from the total foreign tax paid to find the FTC.

With the 10 year carry forward limit, carrying forward the calculated unused FTCs starting with 2012 seems to be the only option. The total FTCs from 2012 forward will fit under the combined FTC limits of 2020 and 2021.  Therefore amending the 2020 and 2021 returns for refunds will capture the unused FTCs going back to at least 2012. All FTC before that date are lost.